As tensions run high over the threat of a currency war and China’s role in territorial disputes in Asia, Prime Minister
Julia Gillard
appears to have safely negotiated potential pitfalls at her first East Asia Summit.

While US Secretary of State
Hillary Clinton
offered to host trilateral talks to turn down the temperature on the territorial disputes and Chinese and Japanese leaders were barely on speaking terms, Ms Gillard held her first meeting with Chinese Premier
Wen Jiabao
. They stressed the importance of deepening economic ties between the two countries.

“China is obviously hugely important to Australia and hugely important as a rising power in the world," Ms Gillard told reporters in Hanoi.

On territorial tensions, Ms Gillard suggested they needed to be resolved through “dialogue and diplomacy’’.

China has been sparring with its Association of South-East Asian Nations neighbours and Japan over territories in the South China Sea and East China Sea.

On currency issues Ms Gillard said she had discussed the issue with Mr Wen in the context of the need to reform the international financial system, with vital economic reform talks scheduled for the G20 meeting in Seoul next week.

China has been under pressure to let its yuan appreciate as part of efforts to rebalance the global economy in the wake of the global financial crisis, while some countries have also been accused of artificially intervening to hold down the value of their currencies to preserve exports.

For his part Mr Wen called for Australia and China to boost co-operation in energy and resources and both made strong statements about restarting stalled free trade talks involving the two countries.

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Ms Gillard also sought to reassure Indian Prime Minister
Manmohan Singh
during another important bilateral meeting of the general revulsion of Australians towards attacks on Indian students and briefed him on progress being made by law and order and immigration authorities.

Ms Gillard had previously met Dr Singh, travelling to India to assuage concerns over the attacks in 2009, and the Indian leader is expected to visit Australia next year.

The Prime Minister’s discussions with Ms Clinton were naturally centred on Afghanistan. Ms Clinton will arrive on Sunday for the annual Australia-US defence and foreign affairs talks in Melbourne.

In terms of Saturday’s summit, which included the leaders of the 10 ASEAN countries plus Australia, China, Japan, New Zealand, India and South Korea, the most important achievement was the endorsement of the US and Russia joining as permanent members from next year.

Having China and the US involved in a piece of regional architecture that deals with the gamut of political economic and security challenges in the Asia-Pacific region was a goal of former prime minister
Kevin Rudd
and Ms Gillard appears a believer.

“I was very pleased to see the summit formally agree to US and Russia becoming members, and participating fully from next year,’’ Ms Gillard said yesterday.

Ms Gillard also announced $32 million to help regional government’s combat infectious diseases, a scholarship scheme for students from EAS countries to study in Australia and $132 million for infrastructure in the Mekong River region.

On global trade Ms Gillard stressed Australia’s commitment to continuing liberalisation and the leaders of the 16 countries also made a strong statement on Doha and used their final communiqué to stress the importance of not retreating into protectionism.

Ms Gillard also explained Australia’s proposal to establish a processing centre for asylum seekers in East Timor and claimed to be rewarded by a supportive statement in the final communiqué.

Ms Gillard held talks with Vietnam’s leaders yesterday to endorse a plan for closer defence and trade ties and will travel to Malaysia today for talks with Malaysian Prime Minister
Najib Razak
.